If you are the parent of a college-bound son or daughter, leaving no stone unturned in the search for financial assistance is certainly an appropriate strategy.
After all, every little bit can help when the average annual cost for attending a four-year private college is running nearly $41,000 today, according to the College Board, and even the national price tag to attend a public in-state college is a not-so-bargain-basement $8,393 a year.
But that doesn’t mean there aren’t some rocks out there that would be better left untouched.
That’s because commingled with the thousands of schools and organizations that offer legitimate scholarships to deserving high-school seniors are an ever-expanding network of scam artists who are far more interested in their own finances than yours.
“With tuition bills skyrocketing, and room and board going through the roof, students and their families are looking for creative ways to finance a college education,” the Federal Trade Commission says in its advisory on financial aid scams. “Unfortunately, in their efforts to pay the bills, many of them are falling prey to scholarship and financial aid scams.”
Sometimes companies will flat-out guarantee they can get you a scholarship in return for an advance fee – and then don’t.
Other times they will declare you are a finalist for a fictitious scholarship that, again, requires an up-front fee to apply.
Still other times they will tout programs they claim – for a one-time processing fee – will boost your chances of receiving federal aid, even though the only application to determine that is the Free Application for Federal Student Aid, or FAFSA, which as the name suggests doesn’t cost you a dime.
Connie Quillen, executive assistant at the Albuquerque-based Better Business Bureau Serving New Mexico and Southwest Colorado, said calls about financial aid typically pick up later in the spring or summer.
But even then, she said, they tend to be more about checking out specific companies or organizations, rather than complaints about possible scams.
“I don’t recall any specifically egregious complaint calls from students,” she said in an email to the Journal. “Just the standard check them out calls.”
How big of a problem are financial aid scams?
Finaid.org, a website founded in 1994 to serve as a free resource for student financial aid, says “several hundred thousand” parents and students are victimized each year to the tune of $100 million in annual losses.
Many times, scammers will use words such as “national,” “federal” or “foundation” to trick parents into thinking they are dealing with reputable financial aid agencies or organizations.
“The parties behind scams are skilled at fooling their targets,” Jacy Shillan, senior marketing manager for sister site Fastweb.com, said in an email response to the Journal. “Students are susceptible due to age and experience, which is why we reinforce the principle that scholarships should always be free.”
Shillan encourages parents and students to learn more about the warning signs of financial aid scams by visiting FinAid.org and Fastweb.com but emphasized this basic rule: “If you are asked to pay to get money or apply for a scholarship, it’s probably a scam.”
For its part, the FTC advises parents and students to be extremely wary if they come in contact with any of the following sales pitches:
- “The scholarship is guaranteed or your money back.”
- “You can’t get this information anywhere else.”
- “I just need your credit card or bank account number to hold this scholarship.”
- “We’ll do all the work. You just pay a processing fee.”
- “The scholarship will cost some money.”
- “You’ve been selected” by a “national foundation” to receive a scholarship, or “You’re a finalist” in a contest you never entered.
Like lotteries and sweepstakes, you can’t win if you didn’t enter.
Nick Pappas is assistant business editor at the Albuquerque Journal and writes a blog called “Scammed, Etc.” Contact him at firstname.lastname@example.org or 505-823-3847 if you are aware of what sounds like a scam. To report a scam to law enforcement, contact the New Mexico Consumer Protection Division toll-free at 1-800-678-1508.